Court Freezes $57.65 Million in USDC Amid Libra Scandal

A US federal court has ordered the freezing of approximately $57.65 million worth of the stablecoin USDC in a class action lawsuit related to the controversial Libra memecoin. This action was taken after a Manhattan court agreed to a temporary freeze on May 28, as confirmed by onchain data shared by the class group’s lawyer, Max Burwick. The court is scheduled to hold a hearing on June 9 to determine whether the assets will remain frozen as the class-action lawsuit progresses.

Burwick is representing Omar Hurlock and other plaintiffs in a class-action suit against crypto venture firm Kelsier Ventures and its three sibling co-founders, Gideon, Thomas, and Hayden Davis. The lawsuit alleges that the defendants created the Libra cryptocurrency and misled investors to siphon over $100 million from one-sided liquidity pools. The suit also names blockchain infrastructure companies KIP Protocol and its CEO, Julian Peh, along with Meteora and its co-founder, Benjamin Chow, as defendants.

The Libra scandal has had significant repercussions, including a political scandal for Argentine President Javier Milei. Following an X post from Milei on February 14, Libra reached a $4 billion market cap before crashing 94% hours later. This event prompted members of Argentina’s opposition party to call for Milei’s impeachment, although little traction was gained beyond those statements. Data from polling platforms suggested that the Libra scandal negatively impacted Milei’s image and the national management approval rating.

Two Solana wallets with total USDC balances worth $57.65 million were frozen on May 28 at 3:15 am and 3:18 am UTC. Data from Solana’s blockchain explorer shows that the address “3Fwr…ZQpK” had $44.59 million worth of the stablecoin frozen, while a little over $13 million was frozen from the wallet address “3nHw…xNgH.” Both wallets were frozen by the Multisig Freeze Authority.

On May 19, Milei signed a decree to shut down a task force established to investigate the Libra scandal. No action was taken against Milei or any other official allegedly tied to the scandal. Critics argue that a legitimate investigation was not properly conducted, with some suggesting that the lack of action indicates a cover-up.

The freezing of $57 million in USDC underscores the seriousness with which authorities are treating the allegations of financial misconduct and potential regulatory violations associated with Libra. This move highlights the challenges faced by cryptocurrency projects in navigating the complex regulatory landscape and gaining the trust of both regulators and the public. The legal proceedings surrounding the Libra scandal are likely to continue, as authorities work to unravel the complex web of financial transactions and allegations of misconduct. The cryptocurrency industry is under intense scrutiny, and projects that fail to comply with regulatory requirements and best practices risk facing serious legal consequences.